MANILA (UPDATE) - Inflation in January accelerated further due to higher electric and water rates, housing rental costs, as well as the continued rise in food and vegetable prices, the Philippine Statistics Authority said on Tuesday.

The consumer price index rose 8.7 percent, the highest since November 2008 and faster than the 8.1 percent inflation in December, the PSA said. January's figure breached the Bangko Sentral ng Pilipinas' estimate of 7.5 to 8.3 percent.

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Inflation in January is way above the government's target range of 2 to 4 percent.

Housing, water, electricity, gas and other fuels posted an inflation rate of 8.5 percent in January from 7 percent in December, data showed.

Another major contributor to inflation for the month is food and non-alcoholic beverages at 10.7 percent inflation from 10.2 percent in December 2022, the PSA said.

Food inflation ballooned to 11.2 percent in January from 10.6 percent eh previous month, driven by the increase in vegetable prices at 37.8 percent from 32.4 percent in December.

For the bottom 30 percent of households, inflation was even higher at 9.7 percent, the highest since March 2009.

“Mataas ang food inflation natin, double digit tayo, malaki ang contribution sa inflation of bottom households, 55 percent of their basket is comprised,” said National Statistician Dennis Mapa.

Following the faster-than-anticipated inflation in January, February’s inflation outlook remains high at around 8.5 to 9 percent, BPI Lead Economist Jun Neri told ANC.

“The rate of deceleration might be a little slower than anticipated, which will affect consumer confidence and overall growth could be affected by inflation affecting consumer confidence,” Neri said.

With inflation exceeding expectations, the BSP is seen to hike interest rates by at least 25 basis points, Neri said. Meanwhile, ING Bank Manila’s Senior Economist Nicholas Mapa said even a 50 bps hike is also now on the table for the central bank.

Inflation for 2023 is seen to average 4.5 percent before easing back to within target by 2024, according to government estimates.

National Economic and Development Authority Secretary Arsenio Balisacan said the government has identified measures to keep food price movements consistent with its inflation and food security objectives.

"A robust and resilient agriculture is vital to ensuring that we have enough supply of food and to keeping food prices stable, especially as we continue to face global headwinds and are exposed to natural hazards. Importantly, it serves as foundation for a strong economy, as agricultural products move up the value chain,” Balisacan said.

Last December, Finance Secretary Benjamin Diokno said that the "worst is over" for the economy, with inflation expected to slow down this year.

With a report from Warren de Guzman, ABS-CBN News

• Inflation likely within 7.5 to 8.3 percent range in January 2023: BSP
• Inflation quickens further to 8.1 percent in December on back of higher vegetable prices

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